After a recent decision of the Court of Cassation, a buyer of a property who takes out a mortgage for less than the maximum amount stipulated in the previous condition reported in the sales agreement is no longer required to proceed with the sale. Therefore, this decision is now part of the case law.
Precondition for buying an extended property – iStock – Andrii Yalanskyi
What is the previous case?
As part of a real estate transaction undertaken by an individual, the sales agreement systematically includes the preconditions for obtaining credit, if the purchase relates to housing and if a loan is requested to finance it. This clause, whose purpose is to protect the purchaser against any unforeseen events, also applies to the purchase of buildings for mixed uses (residential and professional) or land for the construction of buildings. The precedent is subject to a legal deadline: buyers have two months to obtain a loan and inform the seller of the bank’s decision. The precedent of the conditions should be formulated as accurately as possible (the amount, duration and price of the loan), so that any cancellation of the sale cannot be challenged. Until then, the granting of a loan less than the amount mentioned in the promise to sell was not a condition precedent. So the buyer had to accept the offer, if the loan amount respected the predetermined “maximum amount”. From now on, if the bank grants a loan in an amount less than what the buyer requested, the latter may invoke the previous condition for obtaining a loan in order to invalidate the sale promise and cancel it. Thus, the maximum loan amount referred to in the sale promise no longer allows the buyer to force him to accept an offer whose amount will be less.
The situation that “sets a precedent”
The real estate transaction that led to this decision by the Court of Cassation dates back to December 14, 2022. The promise of sale of an apartment was signed by the spouses, through a real estate agency. While the contract stipulated a precondition for a loan of a maximum amount of €414,000, the bank offered a loan of €407,000. Since the loan amount was less than what they had asked for, the buyers decided not to close the sale, but the agency opposed their decision and refused to refund them the freeze compensation. So the case for justice was filed, and the Court of Appeal ruled in favor of the buyers, a decision confirmed by the Court of Cassation last December. According to the Supreme Court, a reference to a “maximum” amount does not oblige buyers to accept an offer for a lower amount. The promise is considered null and void, the real estate agency did not receive its commission, the seller was forced to re-compensate for the freeze, and the sale was not completed. Therefore, the Court of Cassation amended the jurisprudence, and its unpublished decision is now considered the reference ruling on the matter. You should know: In the event that a previous condition is not met, and therefore the sale is canceled, the buyer is obliged to inform the seller by mail of his decision to abandon the purchase of the property.